Give and take

"A man who dies rich, dies disgraced." The words of Andrew Carnegie, the 19th-century steel magnate turned philanthropist, made quite an impression on Scotland's first billionaire, Sir Tom Hunter. In 2007 he told the nation that he planned to give his 10-figure fortune away. But now business difficulties mean dying rich is no longer Sir Tom's most pressing concern. His donations are being cut, and he said at the weekend that his future generosity will depend upon reviving the flagging fortunes of his private-equity fund.

Sir Tom's rethink is part of wider reappraisal of the role of charities, forced by the credit crunch. Community schemes bankrolled by big City firms are already facing the axe. The collapse in savings rates is all but eliminating the interest income of ancient benevolent trusts. As for donations, a study last year showed that they too bear a close relation to national income. Now incomes are slumping, there is every reason to expect giving, too, will start falling off. Unfortunate as it is for everything from the arts to international development, there can no longer be any doubt that all sorts of good causes will soon be feeling the squeeze. The real question is whether this will prove a temporary blip, or whether instead the political emphasis on charity - shared by all the main parties - will come to be seen as a by-product of a new gilded age that has passed.

The runaway riches of the Hunters, Buffets and Soroses of the world do not cease to be problematic even when they are given away. Something is wrong with the Anglo-Saxon model of political economy which allows fortunes to be amassed at the same time as it denies so many others a living wage. Philanthropy in itself will not restore social justice. Only a blinkered puritan, however, could deny that real good can come from the generosity of plutocrats. Think of Carnegie's funds to advance education, built up though they were through brutal union busting. Think too of the profits from armaments that now, with perfect irony, fund the Nobel peace prize. Sir Tom's retail and other activities are benign by contrast, and his pre-credit crunch largesse has already made practical differences, from Africa to Strathclyde.

Mega-philanthropy also brings distinctive advantages in terms of independence from government, as giant research trusts such as Wellcome have long shown. But although it can provide valuable relief to (inevitably) over-stretched public expenditure programmes, its scale turns out to be just as volatile as the wealth on which it depends. The credit crunch is teaching us afresh that there are dangers in banking on handouts.